It noted that average selling prices of its rubber accelerators in the fourth quarter jumped 23 percent on-quarter as production at smaller firms that failed to meet pollution regulations was “severely impacted.”

Fourth-quarter net profit jumped 121 percent on year to 132 million yuan on better-than-expected gross margin and increased output of anti-oxidants, CGS-CIMB said in the note last week. Gross margin improved to 33.3 percent in the quarter, up from 26.8 percent in the third quarter.

It added that because of its net cash position of 500 million yuan at the end of 2017 and zero borrowings, it has “ample ammunition” to fund capacity expansion and to invest in environmental protection equipment.

CGS-CIMB maintained its Add rating, and raised its target price to S$1.62 from S$1.50 after increasing its earnings per share forecasts for 2018-19 by 8.4-13.3 percent.